FIRST-TIME HOME BUYERS GUIDE · 7 Who May Qualify? Veterans Active-Duty Service Members Reservists National Guard Members Eligible Surviving Spouses Benefits of a VA Home Loan: Guarantees

F I R S T - T I M E

HOME BUYERSGUIDE

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Table of ContentsMeet Your Loan Officer

Getting Preapproved at CMG Financial

Know Your Mortgages!

VA Loans

HomeFundIt™

Mortgage Terms

Down Payment Options

Benefits of Homeownership

Rent vs. Own

The Home Loan Process

The Role of the Real Estate Agent

What Type of Home Suits Me?

Picking the Right Neighborhood

Open House Notes

About CMG Financial

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At CMG Financial, our loan officers are here to act as your financial counselor throughout the lending process. Buying your first home is an exciting journey. We want to make the transaction as smooth as possible.

Meet Your

CMG Financial Loan Officer

The CMG Financial Advantage We are able to deliver personalized customer service with the resources of a local lender. Borrowers prefer working with CMG Financial because of our:

Reliable Prequalifications /

Preapprovals

Competitive Rates

Robust Menu of Loan Products

Transparent Communication

Dependable On-Time Closings

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Getting preapproved can have many advantages for home buyers and can even expedite the buying process.

Getting Preapproved at CMG Financial

Some of the benefits include:

Determine how much you can afford ahead

of time.

Get a general idea of what your monthly payment will be.

Estimate your down payment.

Identify qualifying loan

programs.

Most importantly, you can improve seller negotiations. The seller may be more inclined to accept your purchase offer when they know you are qualified to buy their home.

What you need for Preapproval:Income and Employment History

Monthly Debts and Credit Score

Source and Amount of Down Payment and Closing Costs

Completed Loan Application

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You’re going to start hearing some of these words a lot! It’s important to get familiar with these common types of mortgages and mortgage terms before you begin the home buying process.

Know Your Mortgages!

Conventional Adjustable-Rate Mortgage (ARM) – a loan with an interest rate that is tied to a specified financial index, this increases or decreases at scheduled time periods during the life of the loan. The loan includes a margin that is tied to the index.

Fixed-Rate Loan – a loan with an interest rate and payment that remains constant throughout the life of the loan. Interest is amortized over the loan period and factored into the monthly mortgage payment.

Interest Only – monthly mortgage payments consist of interest only for a specific period, usually 5 to 10 years. During the interest only period, your balance remains the same unless you choose to pay extra toward your principal.

Government Federal Housing Administration Loan (FHA) – FHA loans are available as fixed-rate and adjustable-rate mortgages (ARM). FHA loans are insured by the Federal Housing Administration and can offer low down payments as well as higher qualifying ratios. There is a maximum FHA loan limit that varies from region to region.

United States Department of Agriculture (USDA) – designed for rural property purchase or refinance loans.

VA Loan – available to eligible veterans. The Veterans Administration guarantees the repayment of VA Loans to the lender in case of borrower default.

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Who May Qualify? ► Veterans

► Active-Duty Service Members

► Reservists

► National Guard Members

► Eligible Surviving Spouses

Benefits of a VA Home Loan: ► Guarantees a portion of the total loan, enabling more favorable

terms.

► Allows veterans to buy, build, repair, or adapt a home.

► No down payment needed in most cases. No monthly mortgage insurance payment, but an upfront Guaranty Fee is required (some applicants may be exempt).

► Flexible interest rates.

► Flexible financing options to reduce current interest rates (VA IRRRL).

Visit http://www.benefits.va.gov/homeloans/purchaseco_loan_limits.asp to learn more.

CMG Financial is a US Department of Veterans Affairs (VA) approved lender and can issue VA loans guaranteed by the VA.

VA Loans

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Worried about a down payment? Increase your down payment with HomeFundIt™

HomeFundIt™ makes buying a home possible for creditworthy borrowers who are unable to save for a down payment.

Here’s how it works:

Saving for a down payment is one of the biggest challenges future home buyers face. Whether you need to increase your current down payment savings or you’re starting from scratch, HomeFundIt™ can be the down payment solution you’ve been looking for.

Why use HomeFundIt™?

Qualifying home buyers have a chance to have closing costs covered.

► Exclusive Closing Costs Covered program available for first-time home buyers (as defined by Fannie Mae) for users who complete home buyer education or pre-purchase counseling

► CMG Financial will give $1 for every $1 raised via crowdfunding (pledged funds to not apply) up to the lessor of 1% of the purchase price or the amount as noted below:

► Grant funds will be applied to non-recurring closing costs.

HomeFundIt™ is the first online crowdfunding platform that allows prospective home buyers to raise funds towards their down payment.

What is HomeFundIt™?

► Connects directly with your social media accounts, like Facebook and Twitter, to allow users to share their campaigns with their network.

► Family, friends, and anyone else can contribute to your campaign through the shared link.

► The HomeFundIt™ App is now also available on Google Play and Apple Store.

It works like any other social network:

Set up yourcampaign & profile

STEP 3Tell your story and sharewith family and friends

STEP 4Raise money and buy

your new home

STEP 5Get

prequalified

STEP 2Sign up for a free account

STEP 1

Meet the Wilsons

$4,000already saved

$4,500crowdfunded on HomeFundIt™

$8,500new down payment

HomeFundIt™ is a service provided by CMG Financial © 2018 CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS# 1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender, licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025. To verify our complete list of state licenses, please visit www.cmgfi.com/corpo-rate/licensing and www.nmlsconsumeraccess.org. Housing counseling must be completed by HUD approved housing counselor to receive CMG Financial grant. Find a housing counselor near you by visiting https://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. CMG Financial grant will match every $1 raised with a $2 contribution up to 1% of the purchase price but is restricted to $2500 for customers under the area median income and $1000 for cus-tomers who are both over the area median income and first time home buyers. Please consult with your Realtor to determine if there are any Realtor association restrictions regarding their ability to contribute to down payment.Grants available to first time home buyers only. Housing counseling must be completed by HUD approved housing counselor to receive CMG Financial grant. Find a housing counselor near you by visiting https://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. CMG Financial will contribute $1 for every $1 raised via crowdfunding (pledged funds do not apply) up to the lesser of 1% of the purchase price, or $1500 if home buyer education and pre-purchase counseling is completed before the purchase contract is signed, or $1,000 if home buyer education and pre-purchase counseling is completed after the purchase contract is signed. Grant funds can be applied to closing costs. If closing costs are fully paid by seller or interested party, grant funds can be used to buy down the rate. Under no circumstances can grant funds be used towards a down payment. Visit https://homefundit.com/Terms for complete terms and conditions.

WWW.HOMEFUNDIT.COM

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Closing CostsBelow is an overview of the types of closing costs you may incur. When you apply for your loan, you will receive a Loan Estimate and a booklet that will explain these costs in detail. At loan closing, you will receive a Closing Disclosure summarizing your actual loan costs and fees.

Appraisal Fee – Conducted by an independent appraisal company, this pays for a statement of property value for the lender. You will receive your own copy.

Credit Report Fee – This covers the cost of the credit report that is run by an independent credit-reporting agency and is used to prequalify you for a loan and to underwrite your completed loan application.

Impound Account – If you choose to have an impound account, have a government funded FHA or VA Loan, or if your down payment is less than 20%, the lender may require you to establish an account held in trust for you by the lender to pay the costs of your property taxes and insurance. Your monthly payment will include the loan Principal, Interest, Taxes, and Insurance (collectively, P.I.T.I.).

Loan Discount – Often called discount points, a loan discount is a one-time charge used to buy down your specific transaction’s interest rate. One point is equal to 1% of the loan amount.

Loan Origination – This fee covers the lender’s costs for originating your loan.

Title Charges and Document Preparation – The title company may charge one-time fees for a title search and examination, document preparation, notary fees, recording fees, courier fees, and a settlement or closing fee. There are two title policies with a one-time fee: a lender’s title policy, which protects the lender against losses due to defects on title, and a buyers title policy, which protects the borrower against defects on the title.

Prepaid Interest – Amount accrued on a daily basis from the date of loan closing to the due date of your first loan payment.

Taxes and Hazard Insurance – You will be expected to pay for property taxes upfront, including the entire years’ hazard insurance premium. In addition, you may be required to allocate property taxes and property insurance (may include homeowners, flood) into a reserve account, called an impound account, held by the lender.

My Mortgage PaymentYour monthly mortgage payment is made up of several components. This housing expense is commonly referred to as P.I.T.I. or Principal, Interest, Taxes and Insurance. Mortgage Insurance, Flood Insurance, and Homeowners Association fees may also be a portion of your total payment.

Principal – The portion of your payment that is applied to pay down your mortgage.

Interest – A charge for the use, or loan, of money. The interest is calculated on unpaid principal balance.

Taxes – The county assessor charges property tax based on the valuation of your home. For example, in California, there are two tax installments due each year; one in November, the second in April.

Insurance – This pays for losses from certain hazards, including fire. This standard insurance pays for replacement costs based on actual cash value.

Homeowners Association (HOA) Dues – Fees paid by homeowners within a community of homes, condos, townhouses, or planned unit developments (P.U.D.). HOA dues are collected to cover the cost and maintenance of communal areas to the property.

Mortgage Insurance (MI) – Depending on your loan program or the amount of your down payment, you may be required to have MI. Anything less than 20% down - a higher note of default - requires MI. Because loans with small down payments involve substantially more risk for the lender, they require insurance as a hedge against borrower default. The cost of MI varies according to your loan type, down payment, and credit score. FHA Loans charge a fee for life-of-loan mortgage insurance, called Mortgage Insurance Premium (MIP). VA Loans charge an upfront Guaranty Fee in lieu of a monthly mortgage insurance fee.

Mortgage Terms

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Down Payment OptionsLow Down Payment – Pay 5% or less of the home’s price in cash and borrow the rest. VA and USDA Loanshave no down payment options, FHA Loans have lowdown payment options, and some Conventional Financingoptions require down payments as low as 3%.

10% Down Payment – Pay 10% of the home’s price in cash and borrow 90%. Pay for any additional mortgage insurance.

20% Down Payment – Pay 20% of the home’s price in cash and borrow 80%. No mortgage insurance is required.

Benefits ofHomeownership

Join a Community – when you move into your new home, you become part of a new community. Get to know your neighbors, and build a lasting network.

Invest in an Appreciating Asset – real estate has the tendency to appreciate over time.

Escape the Volatile Rental Market – it costs more to rent than own in almost every city and state. Avoid skyrocketing rents and benefit from the stability of a monthly mortgage payment instead.

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Example 1: $200,000 Purchase PriceFinancing FHA Reg VA CONV CONV

Notes Fixed Rate Fixed Rate Fixed Rate Fixed RateSales Price $200,000 $200,000 $200,000 $200,000

% Down 3.50% 0.00% 10.00% 20.00%

First Loan $196,377 $204,300 $180,000 $160,000

Term 30 Years 30 Years 30 Years 30 Years

Rate 4.375% 4.375% 4.500% 4.500%

APR 5.990% 4.600% 4.946% 4.644%

Cash to CloseDown Payment $7,000 $0 $20,000 $40,000

Closing Costs $3,200 $1,300 $3,801 $3,707

Prepaid / Impounds $2,301 $2,192 $2,280 $2,243

Total $ Required $12,501 $3,492 $26,081 $45,950

Housing ExpenseFirst Loan P & I $980 $1,020 $912 $811

Taxes, Ins & MI $475 $258 $369 $258

Total Payment $1,456 $1,278 $1,281 $1,069

Income to QualifyIncome Guide $4,700 $4,410 $3,880 $3,240

Rent vs. Own Crunching the NumbersCompare your own situation to these 3 hypothetical examples of first-time homebuyers just like you.*

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% Down 3.50% 0.00% 10.00% 20.00%

First Loan $294,566 $306,450 $270,000 $240,000


Rate 4.375% 4.375% 4.500% 4.500%

APR 5.966% 4.599% 4.922% 4.618%


Closing Costs $3,688 $1,657 $4,589 $4,448


Total $ Required $17,639 $4,946 $38,010 $67,813

Housing ExpenseFirst Loan P & I $1,471 $1,530 $1,368 $1,216

Taxes, Ins & MI $713 $387 $554 $387

Total Payment $2,183 $1,917 $1,922 $1,603


*Financing examples 1-3 are designed to assist you in selecting the loan that most closely suits your budget and are for comparison only. These examples are not an offer of credit or commitment to lend. Loans are subject to buyer/property qualification. Although rates are accurate to specific examples at present time, these examples are hypothetical and not meant to serve as indicators of current home prices, market rates, or your financial situation. Rates and fees are subject to change without notice. Cash reserves may be required for conventional loans. These simulations are reflective of Contra Costa County, California



% Down 3.50% 0.00% 10.00% 20.00%

First Loan $490,943 $510,750 $450,000 $400,000


Rate 4.375% 4.375% 4.500% 4.500%

APR 5.946% 4.599% 4.904% 4.597%


Closing Costs $4,663 $2,372 $6,165 $4,530


Total $ Required $27,915 $7,854 $61,867 $110,139

Housing ExpenseFirst Loan P & I $2,415 $2,550 $2,280 $2,027

Taxes, Ins & MI $1,188 $645 $923 $645

Total Payment $3,603 $3,195 $3,203 $2,672


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The Home Loan ProcessUnderstand the Life of Your Loan

Meet Your Loan OfficerReview your FICO score and determine your financing options. Having relevant documentation such as pay stubs, W2’s, and government identification can help.

Contracting a HomeMake an offer on the home and obtain a contract on price and terms of purchase. When you have an offer accepted, provide a copy to your loan officer.

ProcessingThe processing team verifies the accuracy of the information provided on the application and reviews the loan request.

UnderwritingOnce fully processed, underwriting begins. If there are additional supportive documents needed, the underwriter will condition those items and work closely with processing and your loan officer to satisfy those requirements.

Loan ApprovalAfter full review, conditional approval is issued.

Closing Day and Document SigningOnce the loan is “Clear to Close,” your loan officer facilitates all final procedures so that you can close your loan on time and without hassle.

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The Role of the Real Estate Agent

► Helps you determine your goals to find the home that best suits your budget, lifestyle, and personal needs.

► Access the Multiple Listing Service (MLS) to find properties for sale in your preferred community. The MLS is the most complete database of properties for sales, and it speeds up research your real estate agent can do for you: http://mls.com

► Protect your rights. Real estate and mortgage finance laws have become quite complicated. Your agent will keep you up-to-date on what is required of you, the seller, and of all other parties involved in your transaction.

► Negotiate for you. Once you find a home you want to buy, your real estate agent handles the process with the seller or seller’s agent.

Learn More:

California Association of Realtors (CAR) - http://www.car.org

National Association of Realtors (NAR) - http://www.realtor.org

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What Type of Home Suits Me?Single Family Home Standalone structure with no shared property.

Planned Unit Development Community of single family structures or townhouses with shared common areas (play areas, community pool, etc.). A Homeowners Association will manage the common areas and charge a Homeowners Association (HOA) fee.

Condominium Unit within a complex with shared walls and common areas. A Homeowners Association (HOA) will manage common areas and the exterior of your unity, for which you pay an HOA fee. The units are sometimes called townhouses.

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Picking the Right NeighborhoodWhen you are shopping for your new home, you will be checking out a variety of different neighborhoods. Before putting an offer on a home, how do you narrow down where you would like it to be?

LocationAre you looking for rural or suburban? Where is the nearest highway? How far away is your workplace, the grocery store, or other services you will need?

School DistrictEven if you do not have children, a community with a highly ranked school district is likely to offer a better quality of life.

SafetyHigher percentages of homeownership often correlates with a safer community. Permanent residents are more invested in their neighborhood security and quality of life.

Rate of OwnershipPrimary residents are more likely than renters to spend money upgrading property over time. This will increase the overall value of the community over time.

Pricing PredictabilityTo determine whether your new home will retain its value over time, check out the historical sale prices for nearby, comparable properties.

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Home Inspection ChecklistPay for a professional home inspection and talk to your Real Estate Agent about the benefits of purchasing a home warranty.

□ Age of Home

□ Floor Plan

□ Square Footage

□ Location

□ Street Traffic

□ Ceiling Height

□ Brightness

□ Included Appliance & Fixtures

□ Heating System

□ Working Appliances

□ Air Conditioning

□ Plumbing

□ Drainage

□ Water Supply

□ Waste Disposal

□ Wiring

□ Insulation

□ Number of Entrances

□ Basement

□ Attic

Must-Have FeaturesIt could be beneficial to rank the importance of the following features. Check those that are most important to you.

Desired Age

Number of Bedrooms

Number of Bathrooms

□ Home Office

□ Study / Library

□ Living / Rec Room

□ Separate Dining Room

□ Master Bath

□ Spacious Closets

□ Family Room

□ Attached Garage

□ Pool

□ Large, Landscaped Yard

□ Mature Trees

□ Fenced Property

□ Walk-In Closets

Other important features:

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My Home Tour NotesOrganize your thoughts about each open house.Property Address:

Notes:

Property Address:

Notes:

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Property Address:

Notes:

Property Address:

Notes:

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About CMG FinancialWe are a well-capitalized, privately held mortgage-banking firm built on over twenty years of lending transparency and client service. Our motto Experience Extraordinary is executed through operational efficiency and support, product innovation, investment in technology, and in-house marketing. Our company contributes to the market through three distinct origination channels including Retail Lending, Correspondent Lending, and Wholesale Lending.

CMG Financial currently operates in 50 states and the District of Columbia and holds federal agency lending approvals with HUD, VA, RHS, GNMA, FNMA, and FHLMC. We achieve our goals through the research and development it takes to stay relevant in this industry. We select partners who are leaders and have the potential to grow with us.

© 2018 CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender with corporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; and Licensed by the Virginia State Corporation Commission #MC-5521. Also licensed in AL, AR, CT, DE, FL, HI, ID, IN, IA, KY, LA, ME, MD, MI, MN, MO, MT, NE, NV, NM, NC, ND, OK, PA, SC, SD, TN, TX, UT, VT, WA, WV, WI, WY and Washington DC. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/licensing.php and NMLS Consumer Access (www.nmlsconsumeraccess.org).

Corporate Headquarters

3160 Crow Canyon Road, Suite 400 San Ramon, CA 94583 | NMLS# 1820

925.983.3000 • www.cmgfi.com

Documents

FIRST-TIME HOME BUYERS GUIDE · 7 Who May Qualify? Veterans Active-Duty Service Members Reservists National Guard Members Eligible Surviving Spouses Benefits of a VA Home Loan: Guarantees